GDP simply measures a nation’s raw economic activity in terms of production and consumption. It makes no attempt to factor in the depletion of natural resources or the degradation of the environment. It cares not for income inequality and all the ills that come with it. It doesn’t pretend to discriminate between beneficial economic activity (new infrastructure, investment in education, disease prevention, etc) and negative activity (the cost of crime, pollution, etc). And it entirely ignores whole swathes of fruitful activity, such as housework or volunteering in the community.
One sign of how destitute GDP is as a metric of well-being is that it tends to go up after a natural disaster. Reconstruction and remediation spur intense activity that is registered by GDP, while the destruction, lives lost, suffering and disruption to families and communities in the wake of a flood, cyclone or bushfire are ignored.
GDP is not, and was never designed to be, a measure of a nation’s well-being. Even its creator, Simon Kuznets, said in 1934 that “the welfare of a nation can scarcely be inferred from a measurement of national income”.
the cost of progress
Jan 17th, 2014 at 06:45